As the markets continued to fall Monday in response to the Trump administration’s tariff proposals,
biotech has particularly been hit hard
. The industry was already being hammered by firings at the FDA, cuts to research grants and a yearslong slowdown after Covid.
To make sense of the stock selloff that started late last week,
Endpoints News
’ Max Bayer and Drew Armstrong spoke to Leerink Partners senior managing director David Risinger, who has been working on Wall Street and covering the biopharma industry for more than 30 years. He’s been through multiple cycles of boom and bust, and spoke to Endpoints late Monday morning as markets continued to fall.
This conversation has been substantially edited for length and clarity.
Endpoints:
Have you ever seen anything like the selloff today?
David Risinger:
No, I haven’t. I guess looking backward, you know, more market observers should have taken Trump’s word seriously — and that includes healthcare observers, when Trump said ahead of the election that if elected he’d let RFK Jr. go wild on healthcare.
Endpoints:
So your sentiment is this was foretold?
Risinger:
Hindsight is 20/20, but pronouncements were made and many observers discounted them — or hoped that things wouldn’t be as bad. But President Trump had said he planned for major tariffs and that they would have a big impact. And he spoke before the election about RFK Jr. I don’t know the exact quote, but his vision is playing out.
Endpoints:
Not to date you, but you lived through 2000, you lived through 2008, you lived through 2020, the Covid market. We’re in early days here, but does this feel analogous to any of that?
Risinger:
This is very different. This situation is not responding to external shocks. This is driven by direct leadership actions. Leadership in Washington has effected DOGE changes via Elon Musk and his external team. The tariffs have been enacted, or announced, despite the history of tariffs being unsuccessful. And the leadership in Washington was extremely supportive of RFK Jr.
A lot of disruption is resulting, and it does seem that until President Trump decides to make a change, it’s hard to have confidence that things will get better in the near term.
Endpoints:
Can I follow up on that? This feels like a situation that decision-making in Washington got us into. But do you think the opposite is true, that different decisions can get us out of it? Or is this damage done?
Risinger:
I fear the latter. I fear the damage is in the process of being done, that the Trump administration is not planning to reverse course. They’re not planning to reverse course on DOGE cuts — they’ve said that they are going to make more DOGE cuts in the future. They’ve said that they plan to follow through on pharmaceutical tariffs. They said that they support RFK Jr. So I’m fearing that things will get worse before they get better.
There isn’t an indication that there’s an interest in making things better or creating improvement in the near term. It seems like they want to follow through on their commitments about causing disruption and change.
I think there’s the possibility of future changes if Republicans rethink their support of tariffs and President Trump and RFK Jr., but we’ll have to see if that happens. It’s a long way to the November 2026 elections.
Endpoints:
Do you see any kind of similarities with the Covid crash, in the sense that we had a sudden global shutdown, in demand and trade and travel? And obviously the reaction to that was very different, but just in terms of the actual kind of shock being similar.
Risinger:
In a sense, yes. A big shock and market meltdown occurred at the time, but this is self-inflicted. During Covid, the United States wasn’t engaging in a global trade war. We had exceptional leadership at HHS.
It’s quite a different story today. President Trump has said that people are going to have to tolerate some near-term pain that’s due to actions by the government. I think [Pershing Square Capital Management’s] Bill Ackman was quoted today, he said something along the lines of
the damage done to America can be significant.
He’s not speaking about healthcare specifically, but the implications of turning against our historical allies has broader geopolitical and trade implications.
Endpoints:
What do you worry is the next shoe to drop here? I mean, is it the pharma tariffs that have been discussed that may be coming?
Risinger:
The next shoes to drop will be the pharma-specific tariffs. The implications of those, I would refer you to [Eli Lilly CEO]
Dave Ricks’ comments to the BBC
. He’s fearing that he’ll have to cut R&D spending because he can’t raise prices to offset tariffs.
When it comes to FDA, the risk is there are delays and new drug approvals and vaccine approvals. We know that [Novavax’s new Covid-19 vaccine]
was delayed from last Tuesday
. We’ll have to also watch whether reviewers can still hold the meetings on a timely basis. The FDA has really led the world in terms of approving drugs faster than other countries. I fear that the MAHA actions and DOGE actions will slow novel therapeutics from coming to market, but we’ll have to see how disruptive those activities are.
And then we’ll have to see what happens to the renegotiation of user fees under RFK Jr., since he has said in the past that he thinks industry has too close of a relationship to FDA. I’ve talked to many people in industry that believe that that’s false: that FDA is independent, despite the funding by industry, and that FDA is not making decisions, broadly speaking, that are problematic for the country, unlike what’s insinuated.
Endpoints:
For people who haven’t lived through one of these market meltdowns before, what are the second-order and third-order effects to be thinking about? Investment funds facing redemptions or margin calls down through decreased deal activity and things like that?
Risinger:
Market meltdowns happen from time to time, but they’re typically not proactively created by the US government. So this is very different, with respect to biopharma companies.
In a typical financial crisis, corporations have to think about their cash flows and balance sheets.
But then the FDA-specific turmoil that is happening really makes it difficult for corporations to plan for the future. When there’s uncertainty like that, it will slow innovation progress and the ability to advance their internal pipelines, but also to evaluate external pipeline candidates.
Endpoints:
Someone just texted me a headline saying Trump is now threatening an additional 50% tariff on China if China doesn’t drop its retaliatory 34% tariff. How do you think that the situation we have going on now — this apparent rupturing of the
US-China trade dynamic
— affects the separate but equally disruptive and interesting
US-China biotech conversation
that has been playing out over the last few months?
Risinger:
It would seem that would have significant negative implications for companies pursuing or acquiring assets out of China. I don’t have a broader vantage point, but it has to be disruptive to future dealmaking.
I think that when it comes down to it, many people haven’t thought of the phrase “tariff war” as seriously as they should. The second word in that phrase is “war,” and that does seem to be what is happening here.
Endpoints:
To wrap up here, a bit of a personal question, how do you try and weather the storm?
Risinger:
One has to stay positive and hope for the best that we do come out of this sooner rather than later. Hopefully democracy will prevail, where if Washington changes need to be made, that will be possible in the future.
Endpoints:
Thanks for chatting with us.
